Up until last year, Jim Daniels spent most of his advertising budget on various forms of Internet advertising, such as e-mails to people who had requested solicitations. As owner and sole employee of Smithfield, Rhode Island-based JDD Publishing, a publisher of Internet marketing books, services and software, Daniels, 35, reached prospects by advertising in e-zines and targeting opt-in e-mail newsletters. In exchange, he got visitors to his Web site and opt-in e-mail addresses for his e-zine.

Although online programs worked well, Daniels decided this past year to try a different approach, an offline one, via a targeted direct-marketing program. After all, he'd already amassed a large internal database of customers' names and street addresses.

Daniels is just one of many e-tailers who started out using online banner-exchange programs, e-mail marketing, search engines and free links to spur traffic to their Web sites. But these days, online tactics alone aren't enough. "Online marketing should be just one component of an Internet [business's] marketing, especially since right now, click-through rates are less than 1 percent," says Tim Washer, vice president of media and telecom practice at NFO Interactive, a market research firm in Greenwich, Connecticut. "The majority of a campaign should be offline."

The Cost Of Offline Advertising

Unfortunately, offline advertising isn't cheap. Studies show that a small Internet company with $20 million in sales generally spends 10 to 20 percent of its revenue on advertising, with 75 percent of the advertising budget spent on offline endeavors. "Offline advertising is more expensive than online, for sure," says Daniels. "Depending on the online method you use, it can be as much as 25 percent more. But it's worth it to me."

For his campaign, Daniels developed a simple four-page, full-color catalog featuring his company's products and services. Now, whenever someone orders a product, he packages the catalog with the order. He also regularly sends it to the customers in his extensive database of names and addresses.

Here's the cost breakdown: To print and mail the first 5,000 catalogs, Daniels spent $2,500. But because the campaign proved so successful, Daniels now sends between 5,000 and 10,000 updated catalogs to customers each year. He has also purchased a list of 5,000 names and addresses of fellow Web site entrepreneurs for 10 cents a piece from infoUSA.com and sends postcards to these prospects any time he wants fresh leads. Total cost? Approximately 2.5 cents printing each direct-mail piece, plus postal bulk-mail rates.

Offline efforts work well for Daniels. Today, he devotes 10 percent of his yearly marketing budget to offline advertising-and that percentage is growing. Says Daniels, "People are constantly changing their e-mail addresses, so it's hard to keep in touch with everybody on your list. But when you put catalogs into customers' hands, you're reaching them in the best way possible."

How Direct Marketing Works

While offline advertising is a good way to drive people to your site, it serves another purpose as well: It lets you compete for customers for a relatively small cost-at least when compared to the millions of dollars large, publicly owned Internet sites spend. "Mom-and-pop shops are competing with all these established brands that have name-recognition and awareness," says Washer, "but they can get more bang for their buck with targeted tactics like direct marketing." By the end of 1999, Washer says, dotcoms spent more than $3 billion on offline advertising. And research suggests they'll continue to spend: A recent study by Jupiter Communications predicts Net companies may invest as much as $7.4 billion by the end of this year in offline radio and TV advertising.

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The good news: Direct-marketing campaigns can easily be prepared in-house. With help from an in-house designer for the catalog, Daniels put his campaign together himself. If you want to follow Daniels' lead and create a direct-mail campaign, Web sites like ELetter.com can help. The San Jose, California, company prints, folds, stuffs, addresses and mails postcards or letters for customers using customers' very own computer-designed mailings, thus eliminating the days, sometimes weeks, it can take to complete the process.

A Step-By-Step Look At Direct Marketing

But direct marketing isn't your only offline alternative. Guerilla marketing, requiring you and your employees to distribute your company-branded merchandise to customers face-to-face, can increase traffic. Outdoor ads, like placing posters, postcards and stickers in highly-visible locations are another form of guerilla marketing. Also, make sure to put your URL everywhere, including stationery, promotional materials, packaging, receipts and more.

But as important as offline advertising is, experts say the best way to get Web site customers is a combination of online and offline promotions. And the messages have to jibe: If your online message says one thing and your offline another, you'll confuse customers.

"You can't have a flashy tag line with smart graphics online, while maintaining a less sophisticated program offline," says Andrea Grenadier of Kirshner & Co. Inc., an agency in Alexandria, Virginia, that works with Web start-ups on ad strategies. "The two really have to work together to get your message out properly."

Direct Hit!

Wanna' see how the offline direct-marketing thing works? Here's a step-by-step look at how Jim Daniels of JDD Publishing, implemented his campaign:

First, Daniels decided how many catalogs to send out. Then he went to the local post office to purchase a yearly bulk-mail permit ($115). This permit enables him to mail hundreds of catalogs at inexpensive rates.

Daniels fed the names and addresses from his substantial database into a bulk-mail program that processes his mail into the format required by the post office. After researching a few of these programs, Daniels went with MyDeluxeMailList and MyPostageRateSaver CD for a total cost of $149. These software programs let him receive automation rates by filtering out non-U.S. addresses, purging duplicate addresses, setting up and bar-coding labels, and sorting bulk mail by ZIP code for processing.

Daniels used an in-house designer to design his catalog (cost: less than $1,000 for the whole job), and made sure his company's bulk-mail permit was printed on every copy.

A reasonably priced printer was hired-and 5,000 catalogs were printed for $1,450. Daniels made sure to print some extras.

Daniels slapped address labels on each catalog and took them to the post office for shipping.